The German economy has officially entered a recession after the country posted negative gross domestic product (GDP) data for this year’s first quarter.
Data from the German statistics office showed a downward revision to first-quarter GDP from zero to -0.3%.
The negative Q1 reading comes after Germany recorded a -0.5% contraction in the fourth and final quarter of 2022.
Two consecutive quarters of negative economic growth are used to define a technical recession.
That the German economy has now entered a recession does not bode well for the European Union (EU) given that Germany is Europe’s largest economy.
Germany’s economy has been under pressure since Russia invaded Ukraine and the EU decided to severe ties with Moscow. At the same time, household spending in Germany has declined in recent months.
German households spent less in Q1, with consumption expenditures falling 1.2% as consumers were reluctant to spend money on clothing, furniture, vehicles, and other discretionary items.
The move into a recession also comes amid high inflation and high interest rates across Europe.
The European Central Bank is expected to raise interest rates at its next meeting on June 15. The central bank has lifted its trendsetting interest rate by 375 basis points since July 2022.
Many economists are forecasting a recession for the global economy in this year’s second half and leading into 2024.
